This post was originally published on April 7, 2016 on the Jobs & Development blog of the World Bank Group
Across the globe, small businesses and entrepreneurs face a myriad of challenges including competition from large multinational retailers, a sluggish economy, and market limitations that come with being tied to brick and mortar stores in less-economically-advantaged areas. However, in recent years a quiet revolution has been brewing because of the development and growth of the ecommerce platform and the digital marketplace.
Barriers to accessing larger and more robust markets are receding and small businesses and entrepreneurs are beginning to leverage technology and global marketplace platforms to reach consumers in new ways. Platforms like eBay or Alibaba are allowing small businesses, and even micro businesses, to open with minimal start-up costs and compete in global markets, an opportunity traditionally open only to the massive global players that have dominated global commerce. What is perhaps most significant is that this ability to access global market opportunities is available to small and micro businesses in advanced AND emerging economies. This is transforming the traditional export growth model and providing new opportunities to small and micro businesses that were traditionally incapable of directly accessing global market opportunities.
In January, the eBay Public Policy Lab released the Small Online Business Growth Report: Towards an Inclusive Global Economy. The report provides trade and growth data across 18 countries for sellers with $10,000 or more in annual sales on the eBay marketplace (eBay-enabled SMEs). Our findings show that eBay-enabled SMEs, many of them micro in size, engage in exporting at unprecedented levels, and reach nearly every corner of the globe. As a result, they are growing faster than their overall national economies. This is true in advanced economies like the US, EU, Australia and Korea, but most striking, similar positive results are occurring in the developing countries, such as South Africa, Indonesia, Mexico and Columbia. This further bolsters the argument that the technology-enabled platform commerce model, which significantly reduces the cost of doing business, is a highly inclusive model of trade. For example, our research revealed:
The Small Business Online Growth Report continues to report on a new model of SME exporting that has emerged in parallel to the SME Global Value Chain model. We have coined the term Global Empowerment Network to describe this new model by which small businesses are able to create a storefront presence online and compete in global markets through e-commerce platforms with vibrant customer bases. The Global Empowerment Network combines a set of services and conditions enabling SMEs to transcend borders, reach customers on a global scale, and facilitate business transactions. There are four key building blocks that fuel the Global Empowerment Network:
Platform-enabled SMEs are a relatively new phenomenon on the global trade scene. To date, policies targeted specifically to facilitate the expansion of technology-enabled SME trade, which would promote more balanced growth and make trade more inclusive, have largely been absent from official trade policy forums. It is now time to elevate a new range of policies that will promote the uptake of this highly inclusive mode of global commerce.
The following general policy recommendations would enhance the ability of platform-enabled SMEs to access the global market regardless of where they are emerging as SME traders globally.
Welcoming more small and micro businesses from across advanced and developing economies into the global market benefits consumers, offering them with more choice, and creates new opportunities for entrepreneurs looking to build and grow their business. Our data paints a brighter future for these small businesses, and demonstrate that ecommerce platforms contribute greatly to the goal of a more inclusive global economy.